November 2018

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US-Mexico revised trade deal signals jettisoning Canada

28Aug '18

The United States and Mexico have reached an agreement to revise key portions of the North American Free Trade Agreement (NAFTA) and would finalize it within days, US President Donald Trump recently said, suggesting he was ready to leave out Canada if the country delayed getting on board. Canada could face auto tariffs if it did not ‘negotiate fairly’, he said.

Trump announced the agreement from the Oval Office on August 27, with Mexican President Enrique Peña Nieto dialling in on a conference call, leading US newspapers reported.

US Trade Representative Robert Lighthizer said the agreement was ‘absolutely terrific’ and would modernize a trade deal that had ‘gotten seriously out of whack’. He hoped the US Congress would approve it with broad bipartisan support.

The agreement reached with Mexico is reportedly a revised NAFTA, with updates to provisions related to digital economy, automobiles, agriculture and labour unions. The core of the trade pact, which allows US firms to operate in Mexico and Canada without tariffs, stays intact.

Several US lawmakers, however, expressed concerns saying it may not be legally permissible to turn a trilateral pact into a bilateral one. Mexican officials want to have Canada back in the process. “It is our wish, Mr. President, that now Canada will also be able to be incorporated in all this,” President Nieto said.

But later in the day, Mexican foreign minister Luis Videgaray Caso signalled that Mexico might be willing to move forward without Canada.

President and chief executive officer of the National Retail Federation (NRF) Matthew Shay said threatening to pull out of the existing agreement is not an encouraging sign as NAFTA supports millions of US jobs and provides hardworking American families access to more products at lower prices.

“To preserve these benefits and protect complex, sophisticated and efficient supply chains, the administration must bring Canada, an essential trading partner, back to the bargaining table and deliver a trilateral deal,” Shay added. (DS)